Fergus Cullen: SNHU reveals a higher-education business model that works

A week after graduating 36 members of the Class of 2012, Chester College abruptly closed. Remaining students transferred to other colleges. Accepted freshmen scrambled to see if other schools that had admitted them still had open spots. Faculty lost their jobs. Recent graduates, holders of devalued degrees, knew they'd bought a worthless pig in a poke, maybe gone into debt for it. Walking the grounds of the deserted campus last month, the place still showed signs of a hasty evacuation, with boxes and furniture abandoned wherever they had been touched last. All that was missing from the campus ghost town was tumbleweed.

The demise of Chester College illustrates how most colleges are businesses dependent on tuition revenue, and how fragile that business model is. A Chester trustee at the time said the school needed 88 incoming freshmen to remain open, but attracted 50 fewer than that. One can imagine under such circumstances, admissions standards weren't very rigorous. It's a sales job. Will your check clear? Great, you're in college!

A couple towns over, Southern New Hampshire University is not going out of business. Unlike most colleges which are slow to change, SNHU constantly innovates to adapt to changing market demand.

SNHU's antecedents offered associate programs in accounting and secretarial. It grew to offer bachelors degrees, then MBAs, and today it grants PhDs. Over the years the school uprooted its main campus from Manchester's downtown to the North End. In 2001 it rebranded from New Hampshire College to SNHU.

Whereas a current student at Dartmouth or the University of New Hampshire attends more or less the same school his or her father or grandfather did, SNHU has evolved so much that each half-generation has attended essentially a different school.

SNHU still offers a traditional, residential, four-year college experience, graduating 866 students last year and issuing 611 graduate degrees. But the bulk of its students take non-traditional paths. The school encourages students to complete four-year programs in just three, saving them money, time, and opportunity cost for the same degree. SNHU has five non-residential satellite campuses serving adult learners. It started an online program way back in 1995, embracing change as an early adopter.

SNHU's newest innovation is the competency-based College for America, through which part-time students gain credit not for logging a specified number of hours sitting in a classroom, but by demonstrating 120 different competencies proving practical mastery of specific skills. Students don't earn grades. They either show mastery of the competency — such as writing a budget — or they keep working until they do, leading to an associates degree.

Traditional SNHU students can spend $110,000 for a four-year bachelors program. Online students might pay $38,000 over four years. But College for America students can earn an associates degree for as little as $5,000. Currently the program is open to students through partnering employers, but it could expand quickly.

Earlier this year, the College for America became eligible for federal student loan programs, the first school of its kind to do so. President Obama gave the program a shout out in a speech last month highlighting innovative ways schools are making college more affordable. Colin Van Ostern, who moonlights as a state Executive Councilor and whose political advancement is blocked for at least a few years by incumbent Democrats higher on the ladder, has just accepted a new job as head of marketing for the program.

The knock on online and competency programs is that the quality is low and large percentages of students who begin this way drop out and never complete a degree. That's true of traditional schools, too. To combat this, SNHU has hired 200 counselors — up from 40 a short time ago — who check in weekly by phone with online students to help keep them on track. Many of these conversations occur via Skype.

The former Chester College shows what happens when a school doesn't innovate. The campus is under agreement to be sold and turned into a senior housing complex. That's senior citizens, not fourth-year students. Meanwhile, SNHU just opened another new dorm for 300 more students.

Fergus Cullen, a freelance columnist, can be reached at fergus@ferguscullen.com or @ferguscullen.